Description of Business and Basis of Presentation

American CareSource Holdings, Inc. (“the Company”, “ACSH”, “we”, “us”, or “our”) operates two lines of business: our urgent and primary care business and our traditional ancillary network business. These lines of business are operated and managed through a shared services function. Through our subsidiaries, we own and operate the healthcare centers offering a wide array of services for non-life-threatening medical conditions. We strive to improve access to quality medical care by offering extended hours and weekend service and also by accepting patients by appointment and on a walk-in basis. The United States healthcare system continues to struggle with challenges relating to access to care, rising costs, the shortage of primary care providers and heavier patient demands resulting from Affordable Care Act mandates.

In early May 2014, we announced our entry into the urgent and primary care market, and subsequently acquired, through our indirect wholly-owned subsidiaries, the following urgent and primary care businesses during 2014 (amounts in thousands):



Business Acquired	State	Sites	Date of Closing	Net Assets Acquired		Consideration paid in Cash		Consideration in Debt
CorrectMed, LLC	Georgia	2	May 8, 2014	$	2,680	$	2,180	$	500
Bay Walk-In Clinic, Inc.	Florida	2	August 29, 2014	2,158		1,500		658
Mid-South Urgent Care, Inc.	Alabama	3	September 12, 2014	1,500		1,350		150

Each of the acquired businesses has been included in our results of operations since the date of closing. Due to the timing of these acquisitions and related operating results, our quarterly operating results are not entirely comparable to prior year periods. See Note 2 - Acquisitions.

Our ancillary network business works to help our clients control healthcare costs by offering cost containment strategies, primarily through the utilization of a comprehensive national network of ancillary healthcare service providers. We market our services to a number of healthcare companies including third-party administrators insurance companies, large self-funded organizations, various employer groups, and preferred provider organizations. We offer this solution by:


•	lowering the payors’ ancillary care costs through our network of high quality, cost effective providers that we have under contract at more favorable terms than they could generally obtain on their own;


•	providing payors with a comprehensive network of ancillary healthcare service providers that is tailored to each payor’s specific needs and is available to each payor’s members for covered services;


•	providing payors with claims management, reporting, processing and payment services;


•	performing network/needs analysis to assess the benefits to payors of adding additional/different service providers to the payor-specific provider networks; and


•	credentialing network service providers for inclusion in the payor-specific provider networks.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), interim reporting requirements of Form 10-Q and Rule 8-03 of Regulation S-X of the rules and regulations of the Securities and Exchange Commission (“SEC”). Consequently, financial information and disclosures normally included in financial statements prepared annually in accordance with GAAP have been condensed or omitted. Balance sheet amounts are as of September 30, 2014 and December 31, 2013 and operating results are for the three and nine months ended September 30, 2014 and 2013, and include all normal and recurring adjustments we consider necessary for the fair, summarized presentation of our financial position and operating results. Operating results of acquired entities are included from the date of acquisition. Certain prior year amounts have been reclassified within the condensed consolidated statement of operations to conform to the current year presentation. As these are condensed financial statements, readers of this report should, therefore, refer to the consolidated financial statements and the notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013, filed with the SEC on February 28, 2014.

Our interim results of operations are not necessarily indicative of results of operations that will be realized for the full fiscal year.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 660): Summary and Amendments that Create Revenue from Contracts with Customers (Topic 606) and Other Assets and Deferred Costs-Contracts with Customers (Subtopic 340-40). The guidance in this update supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition, and most industry-specific guidance throughout the industry topics of the codification. This guidance will be effective for interim and annual periods beginning after December 15, 2016. The Company is currently assessing the impact that this guidance for the company will have on its consolidated financial statements, but does not expect the guidance to have a material impact on the Company's consolidated financial statements.